Will Real Estate Rock in Puerto Rico 2014 Too? What do you think leave your personal comments....
- RISMedia - http://rismedia.com -
Real Estate Will Rock in 2014
Posted By susanne On March 31, 2012 @ 12:03 am In Business
Outlook,Consumer News and Advice,Finance and Economy,Home Owner
News,Real Estate Information,Real Estate News,Real Estate Trends,Today's
Top Story,Today's Top Story - Consumer | No Comments
[1]Housing starts will nearly double and home prices will begin to rise in 2013, with prices increasing significantly in 2014.
Those rosy predictions come from a new semi-annual survey of 38 of
the nation’s leading real estate economists and analysts by the Urban
Land Institute’s Center for Capital Markets and Real Estate. The
economists foresee broad improvements for the nation’s economy, real
estate capital markets, real estate fundamentals and the housing
industry through 2014, including:
• The national average home price is
expected to stop declining this year, and then rise by 2 percent in 2013
and by 3.5 percent in 2014.;
• Vacancy rates are expected to drop in a range of between 1.2 and 3.7
percentage points for office, retail, and industrial properties and
remain stable at low levels for apartments; while hotel occupancy rates
will likely rise;
• Rents are expected to increase for all property types, with 2012
increases ranging from 0.8 percent for retail up to 5.0 percent for
apartments.
These strong projections are based on a promising outlook for the
overall economy. The survey results show the real gross domestic product
(GDP) is expected to rise steadily from 2.5 percent this year to 3
percent in 2013 to 3.2 percent by 2014; the nation’s unemployment rate
is expected to fall to 8.0 percent in 2012, 7.5 percent in 2013, and 6.9
percent by 2014; and the number of jobs created is expected to rise
from an expected 2 million in 2012 to 2.5 million in 2013 to 2.75
million in 2014.
The improving economy, however, will likely lead to higher inflation
and interest rates, which will raise the cost of borrowing for consumers
and investors. For 2012, 2013 and 2014, inflation as measured by the
Consumer Price Index (CPI) is expected to be 2.4 percent, 2.8 percent
and 3.0 percent, respectively; and ten-year treasury rates will rise
along with inflation, with a rate of 2.4 percent projected for 2012, 3.1
percent for 2013, and 3.8 percent for 2014.
The survey, conducted during late February and early March, is a
consensus view and reflects the median forecast for 26 economic
indicators, including property transaction volumes and issuance of
commercial mortgage-backed securities; property investment returns,
vacancy rates and rents for several property sectors; and housing starts
and home prices. Comparisons are made on a year-by-year basis from
2009, when the nation was in the throes of recession, through 2014.
While the ULI Real Estate Consensus Forecast suggests that economic
growth will be steady rather than sporadic, it must be viewed within the
context of numerous risk factors such as the continuing impact of
Europe’s debt crisis; the impact of the upcoming presidential election
in the U.S. and major elections overseas; and the complexities of
tighter financial regulations in the U.S. and abroad, says ULI Chief
Executive Officer Patrick L. Phillips. “While geopolitical and global
economic events could change the forecast going forward, what we see in
this survey is confidence that the U.S. real estate economy has
weathered the brunt of the recent financial storm and is poised for
significant improvement over the next three years. These results hold
much promise for the real estate industry.”
A slight cooling trend in the apartment sector—the investors’ darling
for the past two years—is seen in the survey results, with other
property types projected to gain momentum over the next two years. By
property type, total returns for institutional quality assets in 2012
are expected to be strongest for apartments, at 12.1 percent; followed
by industrial, at 11.5 percent; office, at 10.8 percent; and retail, at
10 percent. By 2014, however, returns are expected to be strongest for
office, at 10 percent, and industrial, at 10 percent; followed by
apartments at 8.8 percent and retail at 8.5 percent.
The forecast predicts a modest increase in vacancy rates, from 5
percent this year to 5.1 percent in 2013 to 5.3 percent in 2014; and a
decrease in rental growth rates, with rents expected to grow by 5
percent this year, and then moderate to a growth rate of 4.0 percent for
2013 and 3.8 percent by 2014. This may be indicative of supply catching
up with demand.
For the housing industry, the survey results suggest that 2012 could
mark the beginning of a turnaround—albeit a slow one. Single-family
housing starts, which have been near record lows over the past three
years, are projected to reach 500,000 in 2012, 660,000 in 2013, and
800,000 in 2014. The overhang of foreclosed properties in markets hit
hardest by the housing collapse will continue to affect the housing
recovery in those markets. However, in general, improved job prospects
and strengthening consumer confidence will likely bring buyers back to
the housing market.
For more information, visit www.realestateeconomywatch.com [2].